Apollo Tyres to invest up to Rs 4k cr on two plants in Chennai, Hungary in FY17

Apollo actiZIP R3NEW DELHI: Apollo Tyres will invest up to USD 600 million (about Rs 4,000 crore) next fiscal to enhance capacity at its plants in India and abroad.

The company, which announced its foray into the two-wheeler market, will start rolling out tyres from its upcoming plant in Hungary by January 2017.

"We plan to spend around USD 500-600 million as part of our capital expenditure in the next fiscal on our two plants in Chennai and Hungary," Apollo Tyres Vice-Chairman and Managing Director Neeraj Kanwar told .

He further said the company is doubling the capacity of its Chennai plant to 12,000 truck and bus radials (TBR) a day from 6,000 earlier.

Initially, the company will sell its Apollo Acti series of tyres for motorcycles and scooters in the aftermarket.

"Today, we are selling all types of tyres except two-wheelers. The Indian two-wheeler industry has been growing and it was time that we entered the segment," Kanwar said.

The Indian two-wheelers category is growing at around 8.5 per cent. The company said as per estimates, there are about 120 million two-wheelers in the country.

Elaborating on the company's strategy for the two-wheeler segment, he said, "initially, we will focus on the aftermarket and gradually build up."

We plan to spend around $500-600 mn as part of our capital expenditure in the next fiscal on our two plants in Chennai and Hungary, Apollo Tyres Vice-Chairman and Managing Director Neeraj Kanwar told.

When asked about expectations from the category, he said it's too early as competitors like MRF, Ceat and TVS have been in the market for a long time.

"We are, however, confident of doing well in the two-wheelers segment considering our brand equity. We entered TBR late in 2008 but we are leaders today. Similarly, we entered passenger cars in 1999-2000 and are among top two players," Kanwar said.

In the first phase, Apollo Tyres will offer two-wheeler tyres which are "coverage oriented", followed by performance- oriented range in the second phase.

The company has outsourced production of the two-wheelers tyres in South India.

"Depending on the demand and growth of volumes, the company will decide where it will manufacture the two-wheeler tyres on its own," the company said.

The company is looking to sell 5 lakh two-wheeler tyres per month over the next two years that would translate roughly into 10 per cent of the market share.

In the next five years, the company plans to offer both bias and radial tyres and attain a market share which will be close to a leadership position.

In fact, segment leaders like Maruti Suzuki, Tata Motors and Hero MotoCorp have reported de-growth of 34.3 per cent, 45 per cent and 20 per cent, respectively giving a clear indication of a prolonged slowdown in the sector.